I always wonder how Americans can make such incredible amounts of money, yet actually spend more than they make. Recently, the US savings rate was -0.5%, meaning that people spent more money than they made. While obviously some of this is attributable to the housing boom, some of it is caused directly by complete waste.

Recently I was shocked to discover that a number of people I know are paying more than $100 a month for cable TV - even up to $150 a month. That's $5 a day just for the service. Now I suppose that doesn't seem like a lot of money if you're making $100,000+ a year. But it certainly adds up, especially considering there are so many more enjoyable healthier hobbies with a cost of $0 per month.

Let's look at the long term financial impact of spending your cash on fancy TVs and expensive cable service.

Assumptions:

You buy a new TV/soundsystem every five years. It costs $3,000 adjusted for inflation.

The money you spend would otherwise be invested in the market on a monthly basis

Amount Spent on the Service: $84,338.36 (360 months @ $150 each month growing every 12 months by inflation at 3%)

Amount of investment gain lost: $739,161.24 (at 12.2%)

Total cost of service: $857,664.53

Present value of the total cost: $343,929.54

Number of days: 10,950

Total daily cost: $31.41

As you can see, if you take into account the gain you would have had if you had invested the money instead of wasting it on television, you can see that over the long term it's a TREMENDOUSLY expensive hobby.

You can apply the same logic to just about any long term recurring expense. Cell phone contracts, gym memberships, magazine subscriptions, etc. Obviously, there's more to life than saving and investing - but you can't have a negative savings rate forever!